‘Dispatches’ – Secrets of Car Insurance

Posted on January 21st, 2013 by Rob Marshall

‘Dispatches’ – Secrets of Car InsuranceWith many people choosing to extend their festive break, Monday 7th January was many workers’ first full salaried day of the New Year. Perhaps the ‘Dispatches’ programme, broadcasted on Channel 4, is a little too serious for a relaxing evening’s viewing but, with its spotlight falling on car insurance repairs, it made relevant television for every vehicle owner.

The programme focussed on the relationship between bodywork repair shops and insurance companies. Obviously, a car insurer has to protect itself against being ‘ripped off’ but the programme argued that ‘big bad insurance’ was cutting costs to the detriment of the repair quality.

While I would agree that a huge financial squeeze is placed on bodyshops to gain insurance company contacts, I have found that poor quality repairs (such as poor paint preparation) can be down to the technician being placed under pressure by his bodyshop boss to complete the task in the fastest possible time, to maximise ever-squeezed profit margins. Yet, I agree with the issue, highlighted by the programme, that an insurance assessor can overrule bodyshop advice, by repairing a damaged part, when replacement is the best alternative.

Yet, I took issue with the programme’s bodyshop ‘whistle-blower’, who stated cost-cutting has resulted in him being asked by an insurer to use non-genuine (i.e. non-manufacturer supplied) parts, some of which do not fit correctly. While I agree with Mr WB that some ‘pattern’ parts require some fettling by the bodyshop technician, not all of them are of inferior quality, a view that I thought was not highlighted by the programme sufficiently, when only an insurance company statement underlined the fact.

Understandably, as they have a vested interest for their profit margins (and those of their dealers), certain car manufactures insist that the use of their own genuine parts is paramount, Volvo and Fiat were mentioned in the programme specifically.

Yet, the programme did not investigate the price differential charged between genuine and non-manufacturer supplied parts. To find out whether or not using non-genuine parts was unjustifiable penny-pinching, which was inferred in the programme, I picked two random models, built in 2004, from the two manufacturers mentioned, and then I compared the cost differences.

First is a Volvo S80. A pattern front wing cost £114.11, compared with a main dealer cost of £218.40. The pattern front bumper was £250.00; the genuine one was more than double, at £520.00. However, the genuine part is supplied pre-painted and takes four days to reach the UK, which will also increase the repair time and, potentially, the cost of the repair.

The quotations for a Fiat Punto were not much better; a front bumper priced at £53.18, while the main dealer item retails at almost four times that, at £198.65. The Fiat agent quoted £78.01 for a passenger side front wing, £30 more expensive than the pattern item.

Such substantial price variations can make the difference between an insurance assessor either writing a car off, or permitting it to be repaired safely and returned to the road. As such, I was disappointed to find the programme did not consider whether or not car manufacturers were overcharging for their crash repair parts.

The programme also accused the insurance companies of seeking discounts through bulk-buying of parts and consumables (a normal business practice) but more serious were the accusations of price inflation, breaching of anti-competition laws and savings not being translated into lower premiums.

While this blog appears to jump to the defence of insurance companies, it seeks to try and counterbalance my personal ‘Dispatches’ disappointment. As I have worked in several bodyshops, I view the programme as too one-sided, having dipped its toes into complex issues to arrive at a safe conclusion, by quoting from the Office of Fair Trading that the motor insurance industry is ‘dysfunctional’.

Meanwhile, I await next year’s expected report on motor insurance from the Competition Commission with great interest. However, I fear that the entire vehicle repair industry, including investigating the price of manufacturer repair parts, needs to be considered more thoroughly and not by an insubstantial half-hour television show.